It was an empty threat though; HK had a huge economy relative to China at the time (and more importantly a well-developed western-connected banking system). If push came to shove they might eventually do that but Deng was highly motivated to avoid such a conflict (imagine what that kind of political instability would have done to China's nascent economic reforms).

It's merely a gesture.

The fact that Britain even come to the negotiation table is a sign that their bottom line is much higher than military actions. Don't be silly to think a prime minister does not know the military power in her command...